Dream Big, Save Smart: How to Set Money Goals
What you'll learn
- How to set financial goals
- The importance of budgeting
- How often to check in on your progress
Ever dreamed of upgrading your gaming setup or catching your favorite artist live?
When you've got your heart set on something that costs more than your current stash of cash—and you're willing to save up money to buy it—you're actually setting a financial goal.
You got this
But let's be real, saving money can be hard! There's always something tempting to spend it on—like lunch with friends, the long-awaited sequel to your favorite video game, or a limited-edition makeup palette.
So, how do you save up for the big stuff without missing out on all the fun? Here are some ideas.
Make a wish list
Write down all the things you want but can't afford right now. Go wild with it! Dream big and have fun.
Research costs
How much do you need to save for each goal? Don't just check the price tag. Think about taxes, shipping, and other fees (like those annoying service charges for sports tickets). Once you've got the full cost, add it to your list.
Set deadlines
How soon do you want to buy each item? Some things, like concert tickets, have specific dates. Others depend on how fast you can save up for them. Give each item a due date to keep you on track.
Make a backward plan
Write down the amount of money you need and work backward to figure out how much you should save each month. Start now!
For example, if a new gaming console costs $500 and it goes on sale in nine months, you'll need to save about $55 a month ($500 divided by 9) to be ready.
Prioritize your list
Got a bunch of stuff on your wish list? No problem! But you probably can't save for everything at once, so you'll need to prioritize:
- Go down your list and put a "1" next to the thing you want the most, or that has the earliest due date.
- Next, find your second-most-important item and mark it with a "2."
- Keep going until you've ranked all your goals.
Build a budget
How many goals you can save for at the same time? It depends on how much money you've got coming in each month (your income) and what else you need or want to spend it on. Balancing it all is called budgeting.
One way to budget is with the 50/30/20 rule: Spend 50% of your income on things you need, 30% on things you want, and 20% on savings.
Spend 50% of your income on things you need, 30% on things you want, and 20% on savings.
| Your monthly income | Needs | Wants | Savings |
|---|---|---|---|
| $100 | Phone bill: $50 | Video game: $30 | $20 |
Depending on your income, you might only be able to save for one goal at a time. Or you might need to adjust some due dates.
No worries! That's why you prioritized your list—so you know what to save for first. Once you hit your first goal, you can shift that money to your next one.
Save extra when you can
The 50/30/20 rule is a solid starting point, but you can always save more whenever you have extra cash.
Maybe your needs don't actually cost 50% of your income. Or maybe you get birthday money that you want to put towards your top goal. The key is to make smart choices whenever you have extra money. We believe that how much you save has the biggest impact on achieving your long-term goals.
Check in often
Seeing your savings stack up is super-motivating and makes it easier to say no to stuff you don't really need.
Stick with it
And hey, don't stress if you fall behind sometimes. Focus on making progress, not being perfect. That way, it's easier to bounce back and get on track.
Trust us, the feeling of finally reaching your goal will make it all worth it.
Quiz
1. True or false? I should only plan and budget for really big goals.
Answer: False | Sure, saving for something huge like a car or college is important, but everyday expenses—like going out with friends, buying snacks, or grabbing that new game—can eat into your money if you're not paying attention.
By budgeting for both big and small goals, you make sure you're covered for everything. Plus, hitting those smaller goals along the way keeps you motivated and makes it easier to stay on track for the big ones. It's all about balance.
2. What does it mean to "backward plan?"
A. Make plans for a task you've already completed.
B. Research the cost of something and when you want it, then budget to pay for it.
C. Agree to walk backward all day.
Answer: B | Think of backward planning like beating a level in a video game. Once you know what the final boss (your big financial goal) looks like, you can work backward to figure out each move you need to beat it.
It helps you break down the goal into smaller, doable steps. Instead of getting stuck, you know exactly what to do next. It's like having a game plan that helps you level up!
3. Which of the following is a rule that can help you create a budget?
A. 20/20
B. 1040
C. 50/30/20
D. Ten-four
Answer: C | Following a plan like the 50/30/20 rule helps you balance the things you want with the things you need. If you don't have a plan, it's way easier to overspend on little things without even realizing it—and that makes it way harder to reach your goals.
Plus, sticking to a budget can help you feel less stressed about money and more in control.
Your next steps
- Create your wish list. This is the fun part! No dream is too big or too small.
- Research the cost of each item on your list. Don't forget about all the little fees that can add up!
- Learn more about creating a real-life budget.